Property taxes are the single largest ongoing cost of homeownership. Here's how they're calculated, how to reduce them, and how your commission structure affects the bigger picture.
Property taxes fund local schools, fire departments, roads, and public services. They're calculated using a straightforward formula:
The two variables that determine your bill:
Understanding this formula matters because it reveals where you have leverage — and where you don't. You can't change the tax rate, but you can challenge your assessed value.
Effective property tax rates vary dramatically across ShopProp's licensed states. Here's what homeowners pay:
No state income tax — property taxes fund a larger share of services. Assessment based on 100% of market value. Annual increases limited without voter approval.
Prop 13 caps base rate at 1% of purchase price with 2% max annual increase. Reassessed to market value upon sale — buyers beware of significant tax jumps.
No state income tax, so property taxes are among the highest nationally. Homestead exemption available ($100K for school district taxes). Appraisal protests common and often successful.
Assessed at 10% of full cash value for owner-occupied (limited property value). Among the lowest effective rates nationally. Primary/secondary residence distinction matters.
Residential assessment rate of 6.95% applied to actual value. One of the lowest effective rates in the country. Reassessment every odd-numbered year.
Assessed at 100% of fair market value. Reassessment cycles vary by locality (1-6 years). Localities may offer tax relief for elderly/disabled homeowners.
Assessed at 50% of market value. Taxable value increases capped at CPI or 5% (whichever is lower) — but uncaps upon sale. Principal Residence Exemption (PRE) reduces the rate by 18 mills.
Lowest effective property tax rate in the nation. Homeowner exemption varies by county ($80K-$160K off assessed value). Higher rates for non-owner-occupied and investment properties.
If your assessed value seems too high, you have the right to appeal. Homeowners who challenge their assessments with solid data win reductions 40-60% of the time.
Check the assessed value, property details (square footage, lot size, bedrooms), and exemptions. Errors in basic property data are more common than you'd think — and they directly inflate your taxes.
Find 3-5 recent sales of similar homes in your area that sold for less than your assessed value. Same neighborhood, similar size, condition, and age. This is your strongest evidence.
If your home has deferred maintenance, structural issues, or functional obsolescence that comparable homes don't have, document it with photos and repair estimates. The assessor may not know about interior conditions.
Deadlines are strict — typically 30-90 days after receiving your assessment notice. File with your county assessor's office or board of equalization. Most jurisdictions allow informal review before formal hearing.
At the hearing, stick to facts and comparable data. Be organized, respectful, and concise. Bring printed copies of your evidence. An appraisal from a licensed appraiser strengthens your case significantly.
Most states offer exemptions that can meaningfully reduce your tax bill. You won't get them automatically — you have to apply.
| Exemption Type | Who Qualifies | Typical Savings |
|---|---|---|
| Homestead | Primary residence owners | $25,000–$100,000 off assessed value |
| Senior Citizen | Age 62-65+ (varies by state) | Assessment freeze or 10-50% reduction |
| Veteran / Disabled Vet | Veterans, active military, disabled vets | Partial to 100% exemption |
| Disability | Permanently disabled homeowners | $10,000–$50,000+ off assessed value |
| Agricultural / Open Space | Agricultural use, conservation easements | 70-90% reduction on qualifying land |
| Energy Efficiency | Solar panels, energy improvements | Partial exclusion of improvement value |
Property taxes are unavoidable. Real estate commissions are not — at least not at the traditional rate.
Consider a homeowner selling a $1.2M home in Washington:
| Cost Category | Traditional Agent (3%) | ShopProp ($4,495) |
|---|---|---|
| Listing Commission | $36,000 | $4,495 |
| Annual Property Tax (0.87%) | $10,440 | $10,440 |
| Closing Costs (~2%) | $24,000 | $24,000 |
| Total Seller Costs | $70,440 | $38,935 |
| Savings with ShopProp | — | $31,505 |
As a buyer, property taxes affect both your monthly payment and your purchasing power:
Property taxes are fixed. Your agent's commission isn't. See exactly how much you'd save with a $4,495 flat fee versus a traditional percentage.
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